MISTRAS Group, Inc. (MG: NYSE), a leading "one source"
multinational provider of integrated technology-enabled asset
protection solutions, reported financial results for its fourth
quarter and year ended December 31, 2023.
“I am pleased to report strong top and bottom-line growth in the
fourth quarter of 2023. Although a small sample, our fourth quarter
performance is evidence of the effectiveness of Project Phoenix
initiatives to improve profitability and Adjusted EBITDA through
meaningful margin improvement and steps to achieve sustained cost
savings. More importantly, this provides momentum heading into
2024, where we expect to realize the majority of the financial
benefits from the implementation in 2023 of the initiatives that
Project Phoenix has driven throughout the organization.
Consequently, I am reiterating our expectation that fiscal 2024
Adjusted EBITDA will be one of our all-time high performance
years,” said Manny N. Stamatakis, Interim President and Chief
Executive Officer.
Edward Prajzner, Senior Executive Vice President and Chief
Financial Officer, commented, “Fourth quarter results clearly
demonstrate that we can drive significant bottom line growth by
leveraging improved sales efficiency and enhanced operational
productivity. Despite headwinds faced earlier in the year, we saw
positive momentum in the second half of 2023 and our fourth quarter
results are a tangible example of the momentum we have built
heading into 2024. We are pleased by the early success achieved on
our Project Phoenix objectives, but also recognize this is only the
beginning and our job is not yet complete. The entire organization
is re-energized and intently focused on finding new opportunities
to efficiently leverage our core competencies.”
Highlights for the Fourth Quarter 2023*
- Revenue of $182.1 million, an increase of
8.2%
- Gross profit of $53.6 million, an increase of 5.3%,
with gross profit margin of 29.5%, a decrease of 80 basis points
due to an unfavorable sales mix and higher employee benefit credits
in the prior year period
- Selling, general and administrative expenses of $42.9
million, up 1.7%, due to higher foreign currency exchange losses
and other discrete items, offset by savings associated with Project
Phoenix actions and other cost reduction measures
- Net loss of $2.5 million, or ($0.08) per share,
reflecting reorganization and other costs of $6.3 million; Net
income excluding special items (non-GAAP) of $2.9 million, or $0.10
per share
- Adjusted EBITDA of $19.2 million, an increase of 22.0%,
as a result of operating leverage and cost controls
* All comparisons are consolidated and
versus the equivalent prior year period, unless otherwise
noted.
For the fourth quarter of 2023, consolidated revenue was $182.1
million, an increase of 8.2% from the fourth quarter of 2022.
Revenue growth in the fourth quarter was led by a 13.4% increase in
the Oil & Gas industry, a 15.3% increase in the Aerospace and
Defense industry and 24.3% growth in the Industrials industry,
which represent our three largest industries. Growth in the Oil
& Gas industry was led by strong turnaround activity, which is
expected to continue into the first quarter of fiscal 2024. Revenue
in the Company’s other industries, primarily Power Generation, was
down from the prior year period primarily due to the completion of
certain projects.
Fourth quarter 2023 gross profit increased 5.3%, although gross
profit margin was down compared to the year ago period. Gross
profit improved from the increase in revenues, while gross profit
margin decreased due to an unfavorable sales mix and higher
employee benefit credits in the prior year period.
Selling, general and administrative expenses (“SG&A”) in the
fourth quarter of 2023 were $42.9 million, up 1.7% from the year
ago period, due to higher foreign currency exchange losses and
other discrete items, offset by savings associated with Project
Phoenix actions and other cost reduction measures. Beginning in the
first quarter of 2024, the Company expects SG&A to be
significantly below comparable year levels due to Project Phoenix
actions completed in 2023. The Company anticipates that SG&A
will reduce to approximately 21% of full year 2024 revenue, from
23.6% in full year 2023.
The Company reported a quarterly net loss of $2.5 million, or
$0.08 loss per share, which included $6.3 million of reorganization
and related costs and $1.2 million of foreign currency exchange
losses.
Net income excluding special items (non-GAAP) was $2.9 million,
or $0.10 per share, for the fourth quarter of 2023, compared to
$0.09 per share in the prior year period.
Adjusted EBITDA was $19.2 million in the fourth quarter of 2023
compared to $15.7 million in the prior year, an increase of
22.0%.
Highlights for Full Year 2023*
- Revenue of $705.5 million, an increase of 2.6% and
exceeding the high end of the Company’s revised
Guidance
- Gross profit of $203.8 million, with gross profit
margin of 28.9%, an increase of 10 basis points due to improved
revenue mix for the year, partially offset by higher employee
benefit credits in the prior year period
- SG&A of $166.7 million, up marginally, less than
1%, due to higher foreign currency exchange losses and other
discrete items, which offset the savings associated with our
Project Phoenix initiatives
- Net loss of $17.5 million, or ($0.58) per share,
primarily due to reorganization and other costs of $12.3 million
and a $13.8 million non-cash goodwill impairment
charge
- Adjusted EBITDA of $65.8 million, an increase of 13.2%
and in line with the Company’s revised Guidance
* All comparisons are consolidated and
versus the equivalent prior year period, unless otherwise
noted.
For the full year, revenue increased 2.6%. Revenue growth was
primarily driven by a 7.3% increase in the Oil and Gas industry,
with growth in all sub-categories of Upstream, Midstream, and
Downstream in addition to a 10.3% increase in the Industrials
industry. These increases were partially offset by a decrease in
revenue in the Power Generation industry due the completion of
certain contracts and declines in Other Process Industries and
Aerospace & Defense. Aerospace and Defense revenue decreased
compared to the prior full year period but rebounded with robust
growth during the fourth quarter of 2023.
For the full year 2023, gross profit increased $5.6 million, or
2.8%, with gross profit margin of 28.9%, a slight increase from
28.8% in the prior year. On a full year basis in 2023, SG&A was
essentially flat. Net loss was $17.5 million for the full year
2023, compared to net income of $6.5 million in 2022. Adjusted
EBITDA was $65.8 million, up 13.2% from $58.2 million in 2022.
Cash Flow and Balance SheetThe Company
generated $26.7 million of net cash from operating activities in
2023, compared to $26.4 million in 2022. Free cash flow was $3.1
million for the year ended December 31, 2023, compared to $13.0
million in the prior year. The Company’s decreased cash flow in
2023 was primarily attributable to a significant increase in
capital expenditures during the current year of $10.2 million as
compared to 2022. The Company is intently focused on organic growth
investments via strategic capital expenditures and improved
commercial functions, in order to foster revenue growth in
expanding areas including Aerospace shop laboratories and Data
Analytical Solutions.
The Company’s gross debt was $190.4 million as of December 31,
2023, compared to $191.3 million as of December 31, 2022 and $193.9
million as of September 30, 2023.
Reorganization and OtherFor the fourth quarter
of 2023, the Company recorded $6.3 million of reorganization costs
related to on-going efficiency and productivity initiatives,
primarily related to overhead cost savings achieved via Project
Phoenix. For the fourth quarter of 2023, these charges included
costs associated with the separation of the Company’s former
President and CEO, professional fees and certain restructuring
charges associated with changes made in the Company’s
organizational structure. For the year ended December 31, 2023, the
Company recorded $12.3 million of total reorganization costs.
Refer to the Company’s press release associated with Project
Phoenix released on November 2, 2023 for additional details
associated with this important initiative.
Preliminary 2024 Outlook The Company reiterates
the preliminary guidance released in conjunction with the release
of its financial results for the third quarter of 2023. For 2024,
the Company anticipates full year revenue between $725-$750 million
and Adjusted EBITDA between $84-$89 million. The Company
additionally expects to generate Free Cash Flow of between $34-$38
million. This outlook for 2024 includes approximately $20 million
in incremental benefit from savings associated with Project Phoenix
initiatives in 2024.
Mr. Stamatakis concluded, “I am extremely encouraged by the
strong early returns from the Project Phoenix related actions. The
increased discipline and accountability implemented throughout the
organization in connection with Project Phoenix have resulted in an
increased focus on achieving the goals we have set for revenue
growth, efficiency improvements and increased profitability. We are
now firmly set on a course to achieve continuous improvement,
further integrate Data Analytical Solutions, and uncover other
opportunities where our proprietary technologies and extensive
knowledge and know-how can solve problems for our customers and
create value for our shareholders.”
Conference Call In connection with this
release, MISTRAS will hold a conference call on March 7, 2024, at
9:00 a.m. (Eastern).To listen to the live webcast of the conference
call, visit the Investor Relations section of MISTRAS Group’s
website at www.mistrasgroup.comNote there is a new process to
participate in the live question and answer session. Individuals
wishing to participate may preregister at:
https://register.vevent.com/register/BIe6bb24671aee4266a3bd30d29905a100Upon
registering, a dial-in number and unique PIN will be provided to
join the conference call. Following the conference call, an
archived webcast of the event will be available for one year by
visiting the Investor Relations section of MISTRAS Group’s
website.
About MISTRAS Group, Inc. - One Source for Asset
Protection Solutions®MISTRAS Group, Inc. (NYSE: MG) is a
leading "one source" multinational provider of integrated
technology-enabled asset protection solutions, helping to maximize
the safety and operational uptime for civilization’s most critical
industrial and civil assets.
Backed by an innovative, data-driven asset protection portfolio,
proprietary technologies, strong commitment to Environmental,
Social, and Governance (ESG) initiatives, and a decades-long legacy
of industry leadership, MISTRAS leads clients in the oil and gas,
aerospace and defense, renewable and nonrenewable power, civil
infrastructure, and manufacturing industries towards achieving
operational and environmental excellence. By supporting these
organizations that help fuel our vehicles and power our society;
inspecting components that are trusted for commercial, defense, and
space craft; building real-time monitoring equipment to enable safe
travel across bridges; and helping to propel sustainability,
MISTRAS helps the world at large.
MISTRAS enhances value for its clients by integrating asset
protection throughout supply chains and centralizing integrity data
through a suite of Industrial IoT-connected digital software and
monitoring solutions. The company’s core capabilities also include
non-destructive testing field and in-line inspections enhanced by
advanced robotics, laboratory quality control and assurance
testing, sensing technologies and NDT equipment, asset and
mechanical integrity engineering services, and light mechanical
maintenance and access services.
For more information about how MISTRAS helps protect
civilization’s critical infrastructure and the environment, visit
https://www.mistrasgroup.com/.
MEDIA CONTACT:Nestor S. MakarigakisGroup
Vice-President of Marketing and Communications+1 (609) 716-4000
| marcom@mistrasgroup.com
Forward-Looking and Cautionary
StatementsCertain statements contained in this press
release are "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements include, but are not limited to, our
2024 outlook, guidance, costs savings and other benefits we expect
to realize from Project Phoenix and actions that we expect or seek
to take in furtherance of our strategies and activities to enhance
our financial results and future growth. Such forward-looking
statements relate to MISTRAS' financial results and estimates,
products and services, business model, Project Phoenix, strategy,
growth opportunities, profitability and competitive position, and
other matters. These forward-looking statements generally use words
such as "future," "possible," "potential," "targeted,"
"anticipate," "believe," "estimate," "expect," "intend," "plan,"
"predict," "project," "will," "may," "should," "could," "would" and
other similar words and phrases. Such statements are not guarantees
of future performance or results, and will not necessarily be
accurate indications of the times at, or by which, such performance
or results will be achieved, if at all. These statements are
subject to risks and uncertainties that could cause actual
performance or results to differ materially from those expressed in
these statements. A list, description and discussion of these and
other risks and uncertainties can be found in the "Risk Factors"
section of the Company's 2022 Annual Report on Form 10-K dated
March 15, 2023, as updated by our reports on Form 10-Q and Form
8-K. The forward-looking statements are made as of the date hereof,
and MISTRAS undertakes no obligation to update such statements as a
result of new information, future events or otherwise.
Use of Non-GAAP Financial MeasuresIn addition
to financial information prepared in accordance with generally
accepted accounting principles in the U.S. (GAAP), this press
release also contains adjusted financial measures that are not
prepared in accordance with GAAP and that we believe provide
investors and management with supplemental information relating to
operating performance and trends that facilitate comparisons
between periods and with respect to trends and projected
information. The term "Adjusted EBITDA" used in this release is a
financial measurement not calculated in accordance with GAAP and is
defined by the Company as net income attributable to MISTRAS Group,
Inc. plus: interest expense, provision for income taxes,
depreciation and amortization, share-based compensation expense,
certain acquisition related costs (including transaction due
diligence costs and adjustments to the fair value of contingent
consideration), foreign exchange (gain) loss, non-cash impairment
charges, reorganization and related charges and, if applicable,
certain additional special items which are noted. A reconciliation
of Adjusted EBITDA to Net Income (Loss) as computed under GAAP is
set forth in a table attached to this press release. The Company
also uses the term “net debt”, a non-GAAP financial measurement the
Company defines as the sum of the current and long-term portions of
long-term debt, less cash and cash equivalents and the term “free
cash flow”, a non-GAAP financial measurement the Company defines as
cash provided by operating activities less capital expenditures
(which is classified as an investing activity). A reconciliation of
these non-GAAP financial measurements to GAAP are also set forth in
tables attached to this press release. In the tables attached is
also a table reconciling “Segment and Total Company Income (Loss)
from Operations (GAAP) to Income (Loss) from Operations before
Special Items (non-GAAP)”, “Net Loss (GAAP) and Diluted EPS (GAAP)
to Net Loss Excluding Special Items (non-GAAP) and Diluted EPS
Excluding Special Items (non-GAAP)” which reconciles the non-GAAP
amounts to the GAAP financial measurement. Each of these non-GAAP
financial measurements has material limitations as a performance or
liquidity measure and should not be considered alternatives to Net
Income (Loss) or any other measurements derived in accordance with
GAAP. Because Income (loss) from operations before special items
and other non-GAAP financial measurements used in this press
release may not be calculated in the same manner by all companies,
these measurements may not be comparable to other similarly-titled
measurements used by other companies.
|
Mistras Group, Inc. and
SubsidiariesUnaudited Consolidated Balance
Sheets(in thousands, except share and per share data) |
|
|
December 31, |
|
|
2023 |
|
|
|
2022 |
|
ASSETS |
|
|
|
Current Assets |
|
|
|
Cash and cash equivalents |
$ |
17,646 |
|
|
$ |
20,488 |
|
Accounts receivable, net |
|
132,847 |
|
|
|
123,657 |
|
Inventories |
|
15,283 |
|
|
|
13,556 |
|
Prepaid expenses and other current assets |
|
14,580 |
|
|
|
10,181 |
|
Total current assets |
|
180,356 |
|
|
|
167,882 |
|
Property, plant and equipment,
net |
|
80,972 |
|
|
|
77,561 |
|
Intangible assets, net |
|
43,994 |
|
|
|
49,015 |
|
Goodwill |
|
187,354 |
|
|
|
199,635 |
|
Deferred income taxes |
|
2,316 |
|
|
|
779 |
|
Other assets |
|
39,784 |
|
|
|
40,032 |
|
Total Assets |
$ |
534,776 |
|
|
$ |
534,904 |
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
Current Liabilities |
|
|
|
Accounts payable |
$ |
17,032 |
|
|
$ |
12,532 |
|
Accrued expenses and other current liabilities |
|
84,331 |
|
|
|
77,844 |
|
Current portion of long-term debt |
|
8,900 |
|
|
|
7,425 |
|
Current portion of finance lease obligations |
|
5,159 |
|
|
|
4,201 |
|
Income taxes payable |
|
1,101 |
|
|
|
1,726 |
|
Total current liabilities |
|
116,523 |
|
|
|
103,728 |
|
Long-term debt, net of current
portion |
|
181,499 |
|
|
|
183,826 |
|
Obligations under finance
leases, net of current portion |
|
11,261 |
|
|
|
10,045 |
|
Deferred income taxes |
|
2,552 |
|
|
|
6,283 |
|
Other long-term
liabilities |
|
32,438 |
|
|
|
32,273 |
|
Total Liabilities |
$ |
344,273 |
|
|
$ |
336,155 |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Equity |
|
|
|
Preferred stock, 10,000,000 shares authorized |
|
— |
|
|
|
— |
|
Common stock, $0.01 par value, 200,000,000 shares authorized,
30,597,633 and 29,895,487 shares issued |
|
305 |
|
|
|
298 |
|
Additional paid-in capital |
|
247,165 |
|
|
|
243,031 |
|
Accumulated Deficit |
|
(28,942 |
) |
|
|
(11,489 |
) |
Accumulated other comprehensive loss |
|
(28,336 |
) |
|
|
(33,390 |
) |
Total Mistras Group, Inc. stockholders’ equity |
|
190,192 |
|
|
|
198,450 |
|
Non-controlling interests |
|
311 |
|
|
|
299 |
|
Total Equity |
|
190,503 |
|
|
|
198,749 |
|
Total Liabilities and Equity |
$ |
534,776 |
|
|
$ |
534,904 |
|
|
Mistras Group, Inc. and
SubsidiariesUnaudited Consolidated Statements of
Income (Loss) (in thousands, except per share data) |
|
|
For the quarter ended December
31, |
|
For the year endedDecember
31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Revenue |
$ |
182,073 |
|
|
$ |
168,218 |
|
|
$ |
705,473 |
|
|
$ |
687,373 |
|
Cost of revenue |
|
122,365 |
|
|
|
111,720 |
|
|
|
477,671 |
|
|
|
466,567 |
|
Depreciation |
|
6,081 |
|
|
|
5,559 |
|
|
|
23,995 |
|
|
|
22,633 |
|
Gross
profit |
|
53,627 |
|
|
|
50,939 |
|
|
|
203,807 |
|
|
|
198,173 |
|
Selling, general and administrative expenses |
|
42,914 |
|
|
|
42,168 |
|
|
|
166,749 |
|
|
|
166,400 |
|
Bad debt provision for troubled customers, net of recoveries |
|
— |
|
|
|
(247 |
) |
|
|
— |
|
|
|
42 |
|
Reorganization and other costs |
|
6,252 |
|
|
|
130 |
|
|
|
12,269 |
|
|
|
195 |
|
Legal settlement and litigation charges (benefit), net |
|
908 |
|
|
|
— |
|
|
|
1,058 |
|
|
|
(994 |
) |
Goodwill Impairment charges |
|
— |
|
|
|
— |
|
|
|
13,799 |
|
|
|
— |
|
Research and engineering |
|
295 |
|
|
|
471 |
|
|
|
1,723 |
|
|
|
1,994 |
|
Depreciation and amortization |
|
2,548 |
|
|
|
2,603 |
|
|
|
10,104 |
|
|
|
10,661 |
|
Acquisition-related expense, net |
|
4 |
|
|
|
12 |
|
|
|
9 |
|
|
|
76 |
|
Income (loss) from
operations |
|
706 |
|
|
|
5,802 |
|
|
|
(1,904 |
) |
|
|
19,799 |
|
Interest expense |
|
4,668 |
|
|
|
3,713 |
|
|
|
16,761 |
|
|
|
10,505 |
|
Income (loss) before
provision (benefit) for income taxes |
|
(3,962 |
) |
|
|
2,089 |
|
|
|
(18,665 |
) |
|
|
9,294 |
|
Provision (benefit) for income taxes |
|
(1,449 |
) |
|
|
(774 |
) |
|
|
(1,220 |
) |
|
|
2,720 |
|
Net income
(loss) |
|
(2,513 |
) |
|
|
2,863 |
|
|
|
(17,445 |
) |
|
|
6,574 |
|
Less: net income attributable to noncontrolling interests, net of
taxes |
|
1 |
|
|
|
21 |
|
|
|
8 |
|
|
|
75 |
|
Net income (loss)
attributable to Mistras Group, Inc. |
$ |
(2,514 |
) |
|
$ |
2,842 |
|
|
$ |
(17,453 |
) |
|
$ |
6,499 |
|
Earnings per common share |
|
|
|
|
|
|
|
Basic |
$ |
(0.08 |
) |
|
$ |
0.09 |
|
|
$ |
(0.58 |
) |
|
$ |
0.22 |
|
Diluted |
$ |
(0.08 |
) |
|
$ |
0.09 |
|
|
$ |
(0.58 |
) |
|
$ |
0.21 |
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
Basic |
|
30,473 |
|
|
|
29,983 |
|
|
|
30,330 |
|
|
|
29,901 |
|
Diluted |
|
30,473 |
|
|
|
30,258 |
|
|
|
30,330 |
|
|
|
30,229 |
|
|
Mistras Group, Inc. and
SubsidiariesUnaudited Operating Data by
Segment(in thousands) |
|
|
For the quarter ended December
31, |
|
For the year ended December
31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue |
|
|
|
|
|
|
|
North America |
$ |
148,035 |
|
|
$ |
138,085 |
|
|
$ |
579,330 |
|
|
$ |
573,336 |
|
International |
|
33,750 |
|
|
|
28,984 |
|
|
|
124,414 |
|
|
|
112,425 |
|
Products and Systems |
|
3,089 |
|
|
|
4,061 |
|
|
|
12,986 |
|
|
|
12,727 |
|
Corporate and eliminations |
|
(2,801 |
) |
|
|
(2,912 |
) |
|
|
(11,257 |
) |
|
|
(11,115 |
) |
|
$ |
182,073 |
|
|
$ |
168,218 |
|
|
$ |
705,473 |
|
|
$ |
687,373 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended December
31, |
|
For the year ended December
31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Gross
profit |
|
|
|
|
|
|
|
North America |
$ |
42,872 |
|
|
$ |
40,701 |
|
|
$ |
163,960 |
|
|
$ |
159,049 |
|
International |
|
9,363 |
|
|
|
8,267 |
|
|
|
33,610 |
|
|
|
33,591 |
|
Products and Systems |
|
1,684 |
|
|
|
1,976 |
|
|
|
6,457 |
|
|
|
5,490 |
|
Corporate and eliminations |
|
(294 |
) |
|
|
(5 |
) |
|
|
(220 |
) |
|
|
43 |
|
|
$ |
53,625 |
|
|
$ |
50,939 |
|
|
$ |
203,807 |
|
|
$ |
198,173 |
|
|
Mistras Group, Inc. and
SubsidiariesUnaudited Revenues by
Category(in thousands) |
|
Revenue by
industry was as follows: |
|
Three Months Ended
December 31, 2023 |
North America |
|
International |
|
Products |
|
Corp/Elim |
|
Total |
Oil & Gas |
$ |
97,558 |
|
|
$ |
10,324 |
|
|
$ |
72 |
|
|
$ |
— |
|
|
$ |
107,954 |
|
Aerospace & Defense |
|
14,484 |
|
|
|
4,817 |
|
|
|
11 |
|
|
|
— |
|
|
|
19,312 |
|
Industrials |
|
11,825 |
|
|
|
8,018 |
|
|
|
437 |
|
|
|
— |
|
|
|
20,280 |
|
Power Generation &
Transmission |
|
5,764 |
|
|
|
1,769 |
|
|
|
578 |
|
|
|
— |
|
|
|
8,111 |
|
Other Process Industries |
|
8,129 |
|
|
|
3,889 |
|
|
|
39 |
|
|
|
— |
|
|
|
12,057 |
|
Infrastructure, Research &
Engineering |
|
3,924 |
|
|
|
2,773 |
|
|
|
409 |
|
|
|
— |
|
|
|
7,106 |
|
Petrochemical |
|
3,189 |
|
|
|
329 |
|
|
|
— |
|
|
|
— |
|
|
|
3,518 |
|
Other |
|
3,162 |
|
|
|
1,831 |
|
|
|
1,543 |
|
|
|
(2,801 |
) |
|
|
3,735 |
|
Total |
$ |
148,035 |
|
|
$ |
33,750 |
|
|
$ |
3,089 |
|
|
$ |
(2,801 |
) |
|
$ |
182,073 |
|
Three Months Ended
December 31, 2022 |
North America |
|
International |
|
Products |
|
Corp/Elim |
|
Total |
Oil & Gas |
$ |
86,474 |
|
|
$ |
8,636 |
|
|
$ |
123 |
|
|
$ |
— |
|
|
$ |
95,233 |
|
Aerospace & Defense |
|
12,369 |
|
|
|
4,308 |
|
|
|
68 |
|
|
|
— |
|
|
|
16,745 |
|
Industrials |
|
9,668 |
|
|
|
5,835 |
|
|
|
812 |
|
|
|
— |
|
|
|
16,315 |
|
Power Generation &
Transmission |
|
8,619 |
|
|
|
1,799 |
|
|
|
624 |
|
|
|
— |
|
|
|
11,042 |
|
Other Process Industries |
|
8,561 |
|
|
|
3,716 |
|
|
|
5 |
|
|
|
— |
|
|
|
12,282 |
|
Infrastructure, Research &
Engineering |
|
4,658 |
|
|
|
1,930 |
|
|
|
1,505 |
|
|
|
— |
|
|
|
8,093 |
|
Petrochemical |
|
5,304 |
|
|
|
123 |
|
|
|
— |
|
|
|
— |
|
|
|
5,427 |
|
Other |
|
2,432 |
|
|
|
2,637 |
|
|
|
924 |
|
|
|
(2,912 |
) |
|
|
3,081 |
|
Total |
$ |
138,085 |
|
|
$ |
28,984 |
|
|
$ |
4,061 |
|
|
$ |
(2,912 |
) |
|
$ |
168,218 |
|
Year ended December
31, 2023 |
North America |
|
International |
|
Products |
|
Corp/Elim |
|
Total |
Oil & Gas |
$ |
379,221 |
|
|
$ |
36,615 |
|
|
$ |
159 |
|
|
$ |
— |
|
|
$ |
415,995 |
|
Aerospace & Defense |
|
56,000 |
|
|
|
20,711 |
|
|
|
286 |
|
|
|
— |
|
|
|
76,997 |
|
Industrials |
|
42,518 |
|
|
|
26,292 |
|
|
|
1,773 |
|
|
|
— |
|
|
|
70,583 |
|
Power Generation and
Transmission |
|
23,598 |
|
|
|
6,609 |
|
|
|
3,767 |
|
|
|
— |
|
|
|
33,974 |
|
Other Process Industries |
|
33,035 |
|
|
|
14,456 |
|
|
|
112 |
|
|
|
— |
|
|
|
47,603 |
|
Infrastructure, Research &
Engineering |
|
16,620 |
|
|
|
9,320 |
|
|
|
3,168 |
|
|
|
— |
|
|
|
29,108 |
|
Petrochemical |
|
13,216 |
|
|
|
1,216 |
|
|
|
— |
|
|
|
— |
|
|
|
14,432 |
|
Other |
$ |
15,122 |
|
|
$ |
9,195 |
|
|
$ |
3,721 |
|
|
$ |
(11,257 |
) |
|
$ |
16,781 |
|
Total |
$ |
579,330 |
|
|
$ |
124,414 |
|
|
$ |
12,986 |
|
|
$ |
(11,257 |
) |
|
$ |
705,473 |
|
Year ended December
31, 2022 |
North America |
|
International |
|
Products |
|
Corp/Elim |
|
Total |
Oil & Gas |
$ |
356,763 |
|
|
$ |
30,654 |
|
|
$ |
335 |
|
|
$ |
— |
|
|
$ |
387,752 |
|
Aerospace & Defense |
|
61,475 |
|
|
|
18,763 |
|
|
|
314 |
|
|
|
— |
|
|
|
80,552 |
|
Industrials |
|
38,197 |
|
|
|
23,703 |
|
|
|
2,083 |
|
|
|
— |
|
|
|
63,983 |
|
Power Generation and
Transmission |
|
31,197 |
|
|
|
8,304 |
|
|
|
2,603 |
|
|
|
— |
|
|
|
42,104 |
|
Other Process Industries |
|
40,778 |
|
|
|
14,021 |
|
|
|
28 |
|
|
|
— |
|
|
|
54,827 |
|
Infrastructure, Research &
Engineering |
|
15,283 |
|
|
|
7,946 |
|
|
|
3,994 |
|
|
|
— |
|
|
|
27,223 |
|
Petrochemical |
|
15,360 |
|
|
|
536 |
|
|
|
— |
|
|
|
— |
|
|
|
15,896 |
|
Other |
|
14,283 |
|
|
|
8,498 |
|
|
|
3,370 |
|
|
|
(11,115 |
) |
|
|
15,036 |
|
Total |
$ |
573,336 |
|
|
$ |
112,425 |
|
|
$ |
12,727 |
|
|
$ |
(11,115 |
) |
|
$ |
687,373 |
|
Mistras Group, Inc. and
SubsidiariesUnaudited Revenues by Category
(continued)(in thousands)
The Company has retrospectively reclassified certain Oil and Gas
sub-category revenues for each quarterly period in 2022 in order to
conform the classification with the current year presentation.
Total Oil and Gas sub-category revenues were unchanged in total in
each quarterly period and for the full year ended December 31,
2022. The table below presents the reclassified balances for each
quarterly period in the prior year.
|
2022 Quarterly Revenues |
|
Three months endedMarch 31, |
|
Three months endedJune 30, |
|
Three months endedSeptember 30, |
|
Three months endedDecember 31, |
Oil and Gas Revenue by
sub-category |
|
|
|
|
|
|
|
Upstream |
$ |
36,397 |
|
|
$ |
38,051 |
|
|
$ |
35,173 |
|
|
$ |
36,435 |
|
Midstream |
|
20,427 |
|
|
|
27,153 |
|
|
|
25,885 |
|
|
|
23,540 |
|
Downstream |
|
37,399 |
|
|
|
36,061 |
|
|
|
35,973 |
|
|
|
35,258 |
|
Total |
$ |
94,223 |
|
|
$ |
101,265 |
|
|
$ |
97,031 |
|
|
$ |
95,233 |
|
Revenue by Oil & Gas Sub-category was as follows:
|
Three months ended December 31, |
|
Year ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Oil and Gas Revenue by
sub-category |
|
|
|
|
|
|
|
Upstream |
$ |
40,887 |
|
|
$ |
36,435 |
|
|
$ |
157,828 |
|
|
$ |
146,056 |
|
Midstream |
|
26,539 |
|
|
|
23,540 |
|
|
|
101,278 |
|
|
|
97,005 |
|
Downstream |
|
40,528 |
|
|
|
35,258 |
|
|
|
156,889 |
|
|
|
144,691 |
|
Total |
$ |
107,954 |
|
|
$ |
95,233 |
|
|
$ |
415,995 |
|
|
$ |
387,752 |
|
Consolidated Revenue by type was as follows:
|
For the quarter ended December 31, |
|
For the year ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Field Services |
$ |
121,932 |
|
|
$ |
109,666 |
|
|
$ |
470,433 |
|
|
$ |
455,051 |
|
Shop Laboratories |
|
15,972 |
|
|
|
13,276 |
|
|
|
58,188 |
|
|
|
48,809 |
|
Data Analytical Solutions |
|
19,542 |
|
|
|
16,624 |
|
|
|
72,458 |
|
|
|
62,410 |
|
Other |
|
24,627 |
|
|
|
28,652 |
|
|
|
104,394 |
|
|
|
121,103 |
|
Total |
$ |
182,073 |
|
|
$ |
168,218 |
|
|
$ |
705,473 |
|
|
$ |
687,373 |
|
|
Mistras Group, Inc. and
SubsidiariesUnaudited Reconciliation
ofSegment and Total Company Income (Loss) from
Operations (GAAP) to Income (Loss) from Operations before
Special Items (non-GAAP)(in thousands) |
|
|
For the quarter ended December
31, |
|
For the year
ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
North
America: |
|
|
|
|
|
|
|
Income from operations (GAAP) |
$ |
15,451 |
|
|
$ |
14,301 |
|
|
$ |
55,170 |
|
|
$ |
49,616 |
|
Bad debt provision for troubled customers, net of recoveries |
|
— |
|
|
|
(247 |
) |
|
|
— |
|
|
|
42 |
|
Reorganization and other costs |
|
386 |
|
|
|
59 |
|
|
|
960 |
|
|
|
99 |
|
Legal settlement and insurance (recoveries) charges, net |
|
908 |
|
|
|
— |
|
|
|
1,058 |
|
|
|
(841 |
) |
Acquisition-related expense, net |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
45 |
|
Income before special items (unaudited, non-GAAP) |
$ |
16,745 |
|
|
$ |
14,113 |
|
|
$ |
57,188 |
|
|
$ |
48,961 |
|
|
|
|
|
|
|
|
|
International: |
|
|
|
|
|
|
|
Income (loss) from operations (GAAP) |
$ |
802 |
|
|
$ |
888 |
|
|
$ |
(12,229 |
) |
|
$ |
3,566 |
|
Goodwill Impairment charges |
|
— |
|
|
|
— |
|
|
|
13,799 |
|
|
|
— |
|
Reorganization and other costs |
|
123 |
|
|
|
71 |
|
|
|
351 |
|
|
|
(43 |
) |
Income before special items (unaudited, non-GAAP) |
$ |
925 |
|
|
$ |
959 |
|
|
$ |
1,921 |
|
|
$ |
3,523 |
|
|
|
|
|
|
|
|
|
Products and
Systems: |
|
|
|
|
|
|
|
Income (loss) from operations (GAAP) |
$ |
345 |
|
|
$ |
342 |
|
|
$ |
267 |
|
|
$ |
(992 |
) |
Reorganization and other costs |
|
193 |
|
|
|
— |
|
|
|
382 |
|
|
|
— |
|
Income (loss) before special items (unaudited, non-GAAP) |
$ |
538 |
|
|
$ |
342 |
|
|
$ |
649 |
|
|
$ |
(992 |
) |
|
|
|
|
|
|
|
|
Corporate and
Eliminations: |
|
|
|
|
|
|
|
Loss from operations (GAAP) |
$ |
(15,892 |
) |
|
$ |
(9,729 |
) |
|
$ |
(45,112 |
) |
|
$ |
(32,391 |
) |
Legal settlement and insurance (recoveries) charges, net |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(153 |
) |
Loss on debt modification |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
693 |
|
Reorganization and other costs |
|
5,550 |
|
|
|
— |
|
|
|
10,576 |
|
|
|
139 |
|
Acquisition-related expense, net |
|
4 |
|
|
|
12 |
|
|
|
9 |
|
|
|
31 |
|
Loss before special items (unaudited, non-GAAP) |
$ |
(10,338 |
) |
|
$ |
(9,717 |
) |
|
$ |
(34,527 |
) |
|
$ |
(31,681 |
) |
|
|
|
|
|
|
|
|
Total
Company |
|
|
|
|
|
|
|
Income (loss) from operations (GAAP) |
$ |
706 |
|
|
$ |
5,802 |
|
|
$ |
(1,904 |
) |
|
$ |
19,799 |
|
Goodwill Impairment charges |
|
— |
|
|
|
— |
|
|
|
13,799 |
|
|
|
— |
|
Bad debt provision for troubled customers, net of recoveries |
|
— |
|
|
|
(247 |
) |
|
|
— |
|
|
|
42 |
|
Reorganization and other costs |
|
6,252 |
|
|
|
130 |
|
|
|
12,269 |
|
|
|
195 |
|
Legal settlement and insurance (recoveries) charges, net |
|
908 |
|
|
|
— |
|
|
|
1,058 |
|
|
|
(994 |
) |
Loss on debt modification |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
693 |
|
Acquisition-related expense, net |
|
4 |
|
|
|
12 |
|
|
|
9 |
|
|
|
76 |
|
Income before special items (unaudited, non-GAAP) |
$ |
7,870 |
|
|
$ |
5,697 |
|
|
$ |
25,231 |
|
|
$ |
19,811 |
|
|
Mistras Group, Inc. and
SubsidiariesUnaudited Summary Cash Flow
Information(in thousands) |
|
|
For the quarter endedDecember
31, |
|
For the year endedDecember
31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net cash provided by (used
in): |
|
|
|
|
|
|
|
Operating activities |
$ |
16,064 |
|
|
$ |
15,875 |
|
|
$ |
26,748 |
|
|
$ |
26,406 |
|
Investing activities |
|
(6,963 |
) |
|
|
(3,361 |
) |
|
|
(22,133 |
) |
|
|
(12,238 |
) |
Financing activities |
|
(5,867 |
) |
|
|
(11,570 |
) |
|
|
(7,706 |
) |
|
|
(16,323 |
) |
Effect of exchange rate
changes on cash |
|
1,660 |
|
|
|
1,460 |
|
|
|
249 |
|
|
|
(1,467 |
) |
Net change in cash and cash
equivalents |
$ |
4,894 |
|
|
$ |
2,404 |
|
|
$ |
(2,842 |
) |
|
$ |
(3,622 |
) |
|
Mistras Group, Inc. and
SubsidiariesUnaudited Reconciliation of
Net Cash Provided by Operating Activities (GAAP) to Free
Cash Flow (non-GAAP)(in thousands) |
|
|
For the quarter endedDecember
31, |
|
For the year endedDecember
31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities (GAAP) |
$ |
16,064 |
|
|
$ |
15,875 |
|
|
$ |
26,748 |
|
|
$ |
26,406 |
|
Less: |
|
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
(6,451 |
) |
|
|
(3,541 |
) |
|
|
(20,854 |
) |
|
|
(12,591 |
) |
Purchases of intangible assets |
|
(927 |
) |
|
|
(245 |
) |
|
|
(2,795 |
) |
|
|
(825 |
) |
Free cash flow
(non-GAAP) |
$ |
8,686 |
|
|
$ |
12,089 |
|
|
$ |
3,099 |
|
|
$ |
12,990 |
|
|
Mistras Group, Inc. and
SubsidiariesUnaudited Reconciliation of
Gross Debt (GAAP) to Net Debt (non-GAAP)(in
thousands) |
|
|
|
For the year
endedDecember 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
Current portion of long-term
debt |
|
$ |
8,900 |
|
|
$ |
7,425 |
|
Long-term debt, net of current
portion |
|
|
181,499 |
|
|
|
183,826 |
|
Total Gross Debt
(GAAP) |
|
|
190,399 |
|
|
|
191,251 |
|
Less: Cash and cash
equivalents |
|
|
(17,646 |
) |
|
|
(20,488 |
) |
Total Net Debt
(non-GAAP) |
|
$ |
172,753 |
|
|
$ |
170,763 |
|
|
Mistras Group, Inc. and
SubsidiariesUnaudited Reconciliation of
Net Income (Loss) (GAAP) to Adjusted EBITDA
(non-GAAP)(in thousands) |
|
|
For the quarter ended December
31, |
|
For the year
endedDecember 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
Net income
(loss) |
$ |
(2,513 |
) |
|
$ |
2,863 |
|
|
$ |
(17,445 |
) |
|
$ |
6,574 |
|
Less: Net income attributable to noncontrolling interests, net of
taxes |
|
1 |
|
|
|
21 |
|
|
|
8 |
|
|
|
75 |
|
Net income (loss)
attributable to Mistras Group, Inc. |
$ |
(2,514 |
) |
|
$ |
2,842 |
|
|
$ |
(17,453 |
) |
|
$ |
6,499 |
|
Interest expense |
|
4,668 |
|
|
|
3,713 |
|
|
|
16,761 |
|
|
|
10,505 |
|
Provision (benefit) for income taxes |
|
(1,449 |
) |
|
|
(774 |
) |
|
|
(1,220 |
) |
|
|
2,720 |
|
Depreciation and amortization |
|
8,629 |
|
|
|
8,162 |
|
|
|
34,099 |
|
|
|
33,294 |
|
Share-based compensation expense |
|
1,498 |
|
|
|
1,169 |
|
|
|
5,147 |
|
|
|
5,335 |
|
Goodwill Impairment charges |
|
— |
|
|
|
— |
|
|
|
13,799 |
|
|
|
— |
|
Reorganization and other related costs, net |
|
6,252 |
|
|
|
130 |
|
|
|
12,269 |
|
|
|
195 |
|
Legal settlement and insurance recoveries, net |
|
908 |
|
|
|
— |
|
|
|
1,058 |
|
|
|
(994 |
) |
Acquisition-related expense, net |
|
4 |
|
|
|
12 |
|
|
|
9 |
|
|
|
76 |
|
Loss on debt modification |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
693 |
|
Bad debt provision for troubled customers, net of recoveries |
|
— |
|
|
|
(247 |
) |
|
|
— |
|
|
|
42 |
|
Foreign exchange (gain) loss |
|
1,182 |
|
|
|
709 |
|
|
|
1,331 |
|
|
|
(215 |
) |
Adjusted
EBITDA |
$ |
19,178 |
|
|
$ |
15,716 |
|
|
$ |
65,800 |
|
|
$ |
58,150 |
|
|
Mistras Group, Inc. and
SubsidiariesUnaudited Reconciliation
ofNet Income (Loss) (GAAP) and Diluted EPS (GAAP)
to Net Income Excluding Special Items (non-GAAP)
and Diluted EPS Excluding Special Items
(non-GAAP)(tabular dollars in thousands, except per share
data) |
|
|
For the quarter ended December 31, |
|
For the year ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income (loss)
attributable to Mistras Group, Inc. (GAAP) |
$ |
(2,514 |
) |
|
$ |
2,842 |
|
|
$ |
(17,453 |
) |
|
$ |
6,499 |
|
Bad debt provision for troubled customers, net of recoveries |
|
— |
|
|
|
(247 |
) |
|
|
— |
|
|
|
42 |
|
Goodwill Impairment charges |
|
— |
|
|
|
— |
|
|
|
13,799 |
|
|
|
— |
|
Reorganization and other related costs, net |
|
6,252 |
|
|
|
130 |
|
|
|
12,269 |
|
|
|
195 |
|
Loss on debt modification |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
693 |
|
Legal settlement and insurance recoveries, net |
|
908 |
|
|
|
— |
|
|
|
1,058 |
|
|
|
(994 |
) |
Acquisition-related expense, net |
|
4 |
|
|
|
12 |
|
|
|
9 |
|
|
|
76 |
|
Special items total |
|
7,164 |
|
|
|
(105 |
) |
|
|
27,135 |
|
|
|
12 |
|
Tax impact on special items |
|
(1,787 |
) |
|
|
25 |
|
|
|
(3,256 |
) |
|
|
(5 |
) |
Special items, net of tax |
$ |
5,377 |
|
|
$ |
(80 |
) |
|
$ |
23,879 |
|
|
$ |
7 |
|
Net income
attributable to Mistras Group, Inc. Excluding Special Items
(non-GAAP) |
$ |
2,863 |
|
|
$ |
2,762 |
|
|
$ |
6,426 |
|
|
$ |
6,506 |
|
|
|
|
|
|
|
|
|
Diluted EPS
(GAAP) |
$ |
(0.08 |
) |
|
$ |
0.09 |
|
|
$ |
(0.58 |
) |
|
$ |
0.21 |
|
Special items, net of tax |
|
0.18 |
|
|
|
— |
|
|
|
0.79 |
|
|
|
— |
|
Diluted EPS Excluding
Special Items (non-GAAP) |
$ |
0.10 |
|
|
$ |
0.09 |
|
|
$ |
0.21 |
|
|
$ |
0.21 |
|
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